Best and Final: the Dreaded Multiple Offer5/1/2013
Those who have been paying close attention to how the houses for sale in West Chester have been performing may have observed the results of the dreaded multiple offer situation. When a closing price seems to rise unexpectedly, it could be because of something called the Notice of Best and Final.
That notice can be issued by a listing agent as soon as more than one offer is on the table. Experienced real estate agents sometimes choose this strategy to win the best price for their client. It instructs all interested buyers to submit their best and final offer by a deadline (usually within 24 - 48 hours). Since no counters or escalation clauses are allowed, one blogger has aptly called it Multiple Offer Sudden Death. Here's how it works:
- The sellers asking price is listed at, say, $320,000.
- Buyer A is interested; bids $310,000.
- After a few rounds of negotiation, the seller and Buyer A near agreement at $316,000, when-
- Buyer B, not knowing that the seller is nearing agreement with Buyer A, submits her own bid.
- The seller initiates Notice of Best and Final, giving both parties two days to submit their last offer.
- Buyer A begrudgingly goes up to the full list price: now offers $320,000.
- Buyer B shoots all the way up to $329,000 the offer which is accepted.
In this scenario, Buyer B not only paid $13,000 more than Buyer A was about to pay, but also paid $8,000 more than needed to beat Buyer As top price.
Great news for the seller, for sure but less exciting for the buyers, since what was a great deal just becomes so-so. That's why I advise my buyer clients to do their best to remain emotionally detached. I suggest deciding on the true value you believe the home is worth, then sticking to it, no matter what!
Whether you are selling or buying houses for sale in West Chester, I'm here to watch out for your best interests in every situation. Call me today to discuss a plan that works for you!